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FBT Q&A ‘ Is there a FBT limit for alcoholic drinks when an employee is travelling on work?

Food and drink consumed by an employee when travelling is generally regarded as sustenance and otherwise deductible, including where alcohol is consumed. However, is there a point in time when the alcohol consumption takes the food and drink outside of the sustenance category?

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Question

Employees are reimbursed for meals and 2 standard drinks as part of our general policy when dining while travelling on business trips involving an overnight stay.

However, sometimes they consume more than 2 standard drinks. If we reimburse them for the drinks over and above the 2 standard drinks allowed, how is this to be treated for FBT purposes?

Answer

Where an employee is travelling on a business trip, the consumption of food & drink – including alcohol – does not constitute meal entertainment based on the ATO’s views in TR 97/17 – specifically refer to Examples 3.1 and 3.2 in the ruling.

So it seems there does not appear to be an upper limit insofar as how much alcohol can be consumed except the physical limit of the particular employee!

Where, however, the food and drink is consumed in association with other forms of entertainment – such as a floor show – the character of the food and drink will change to that of entertainment.

Disclaimer: This article is based upon information available as at the time of publishing and may be subject to change.